Trusts are a tool that can be used to accomplish tax and estate planning objectives and create privacy. When a property is placed into a trust, the ownership of the property is transferred, and the trust must also be protected by your insurance coverage. You will want to make sure both you and your trust are protected by your insurance policy.
How To Add Your Trust to Your Insurance Policy
- Email your insurance agent the complete name of your trust.
- Your Insurance agent will add your trust as either an additional insured or named insured depending on the insurance carrier and your preference.
- Your agent will confirm your trust has been added and you will receive confirmation directly from your insurance company as well.
- Keep this confirmation with your trust or in your records.
- If you have an umbrella policy, it also needs to be endorsed to include the name of your trust as an additional insured or named insured.
Adding your trust as an additional insured or named insured will protect your trust as well as you in the event of a liability or property insurance claim. If however, your goal is complete separation of you, as an individual, from your trust, the property must be insured only in the name of your trust. If your property is insured in only the name of your trust, you may need a renters insurance policy to cover your personal property.
What Are the Risks of Not Including My Trust on My Property Insurance Policy?
- Claim denial Due to Ownership Mismatch. You could have a claim denied because the owner of the property, is not listed on the insurance policy. While we have never heard of this happening, its better to be safe and add your trust to your insurance policy.
- Liability Coverage Issues. In the example above, if your home is titled to your trust, that is one of the entities that will be included in the lawsuit. If your trust has not been included on your insurance, it could leave your trustee or beneficiaries financially vulnerable.
- Potential Policy Cancellation. Insurance companies want to know who and what they are insuring and transfer of your property to the trust could be viewed as a material change in risk.
What Does It Mean to Add Your Trust as an Additional Insured?
When you add your trust as an additional insured, you are ensuring that:
- The trust itself is covered under the homeowners or property insurance policy.
- The trustee is protected in the event of a property or liability claim.
- Insurance claims won’t be delayed or denied due to a technicality around ownership.
Some insurance companies or agents may suggest listing the trust as an additional interest or additional interested party rather than an additional insured. The protection however, is not the same.
- Additional insured provides all of the policy coverage for the trust.
- Additional interest or interested party only notifies the insurance company of the trust’s involvement and does not extend full policy benefits.
- Named Insured lists the trust first and if you occupy the property, you will want to be listed as a named insured as well unless your goal is complete separation which can be much more complicated.
FAQ’s Regarding Trusts and Homeowners Insurance:
Doesn’t my existing policy Already Cover My Trust?
No, your trust has to be listed on your policy, preferably as an additional insured or, your policy may not extend any or all of the coverage to your trust, trustees and beneficiaries. The insurance company may argue that the trust, as a legal property owner, is not protected under the policyholder’s name.
Will Adding My Trust Increase My Insurance Premium?
No, including your trust is an easy name change and there is no additional charge on a homeowner’s or property insurance policy.
For any additional questions regarding adding your trust to your homeowners or property insurance policy, please don’t hesitate to reach out to a knowledgeable Anderson Insurance Group agent today.
Anderson Insurance Group does not provide legal advice, please refer to your attorney for trust and LLC information.
For information on insuring your home in the name of an LLC, please click here:
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